Loan Against Property (LAP), also known as a mortgage loan, is a versatile financial solution for raising capital by leveraging residential, commercial, or industrial properties. Unlike unsecured personal loans, LAP offers distinct advantages, making it popular for personal and business financial needs, excluding speculative purposes. Banks and Housing Finance Companies (HFCs) typically provide LAP for terms up to 20 years, with loan amounts reaching 75% of the property's market value, based on the lender and borrower's creditworthiness. Additionally, Lease Rental Discounting (LRD) options are available, allowing loans against rental income.

Features & Benefits of Loan Against Property

1. Lower Interest Rates: LAP offers lower interest rates due to its secured nature, reducing the lending risk for banks and Non-Banking Financial Companies (NBFCs), making it more competitive compared to unsecured loans.
2. No End-Use Restrictions: The funds from LAP can be used for various purposes such as consolidating high-interest debts, wedding expenses, business expansion, or other financial needs.
3. Longer Loan Tenure: Offers repayment periods up to 20 years, easing the monthly financial burden, and providing better financial management for borrowers.
4. Higher Loan Amount: Lenders may offer financing up to 70% of the property's value, allowing significant capital for major financial requirements.
5. Higher Chances of Loan Approval: Since the loan is secured with property collateral, the risk for lenders is lowered, enhancing the approval odds.
6. Overdraft Facility: Borrowers can access an overdraft facility on their LAP, offering greater liquidity at lower costs, beneficial for short-term financial needs.

Loan Against Property Interest Rates from Top Banks & HFCs

Interest rates for LAP differ across banks and HFCs. Below is a summary:

• Bank of India: 10.10%-12.60% (Processing Fee: Up to 1%, Rs 5,000 - Rs 50,000)
• Bank of Baroda: 10.85% - 18.60% (Processing Fee: Up to 1%, Rs 8,500 upfront - Rs 75,000)
• Bank of Maharashtra: 10.45% - 11.95% (Processing Fee: 1%)
• Federal Bank: 12.60% onwards (Processing Fee: 1%, min Rs 3,000)
• HDFC Bank: 9.50% - 11.00% (Processing Fee: Up to 1%, min Rs 75,000)
• ICICI Bank: 10.85% - 12.50% (Processing Fee: Up to 1%)
• IDFC First Bank: 9.00% - 16.50% (Processing Fee: Up to 3%)
• Indian Bank: 10.00% - 12.75% (Processing Fee: 1%)
• Indiabulls Housing: 9.75% onwards (Processing Fee: 1% onwards)
• Kotak Mahindra Bank: 9.50% onwards (Processing Fee: Up to 1%)
• L&T; Housing Finance: 9.50% onwards (Processing Fee: Up to 2%)
• LIC Housing Finance: 9.50% - 11.55% (Processing Fee: Up to 1%)
• PNB Housing Finance: 10.40% - 12.75% (Processing Fee: 0.75%, max Rs 1 lakh)
• State Bank of India: 10.00% - 11.30% (Processing Fee: Flat Rs 10,000)
• Tata Capital: 9.00% onwards (Processing Fee: Up to 1.25%)
• Union Bank of India: 10.45% - 13.10% (Processing Fee: Up to 1%, min Rs 5,000 & max Rs 1 lakh)
• UCO Bank: 10.85% - 12.00% (Processing Fee: 0.50% up to Rs 2 lakh)

Note: Rates are as of 24 June 2024 and may vary.

Eligibility Criteria for Loan Against Property

Eligibility criteria can vary among lenders but generally include:

• Residential Status: Resident Indian and Non-resident Indian (NRI)
• Minimum Age: 18 years
• Maximum Age: 70 years
• Employment Type: Salaried, Self-employed Professional, and Non-Professional
• Minimum Salary: At least Rs. 12,000 per month
• Net Annual Income: At least Rs. 1.5 lakh per annum
• Work Experience: At least 1 year with the current employer
• Loan-to-Value (LTV) Ratio: Up to 75% of property value
• Credit Score: Preferably 750 and above
• Property Type: Eligible properties include residential, commercial, and industrial, considering the property's age and condition.

EMI Calculator for Loan Against Property

Before applying for a LAP, use an EMI calculator to determine affordability. Paisabazaar's EMI Calculator provides instant results, showing total interest and principal payable, as well as the amortization schedule for better loan repayment understanding.

Documents Required for Loan Against Property

Documentation includes:

• Proof of Identity: Passport, Voter ID, Driving License, PAN Card
• Proof of Residence: Ration card, Telephone Bill, Electricity Bill, Rental Agreement
• Proof of Age: PAN Card, Passport
• Proof of Income for Salaried Individuals: Form 16, Latest Payslips, ITR of past 3 years
• Proof of Income for Self-Employed: ITR of last 3 years, Business License, Balance Sheet
• Property-related Documents: Title Deeds, Encumbrance Certificate, Approved plan if applicable

*For a detailed list, refer to the lender's specific requirements.

Processing Fees & Charges

Standard charges may include:

• Processing Fees: 1% - 2% of the loan amount
• Part Prepayment Charges: Floating Rate: Nil; Fixed Rate: Up to 4% on outstanding principal
• Foreclosure Charges: Floating Rate: Nil; Fixed Rate: Up to 2% on outstanding principal
• Penal Interest: Typically 24% annually (2% monthly on overdue installments)

How to Apply for Loan Against Property on Paisabazaar.com

• Enter basic details like mobile number, loan amount, and property location.
• Compare and apply for offers that suit your needs.
• Loan experts from Paisabazaar will assist you through the process.

Conclusion

A Loan Against Property (LAP) allows leveraging property value for major financial needs with benefits like lower interest rates, extended tenure, and larger loan amounts, suited for personal or business use. Understanding eligibility, documentation, and fees ensures a smooth application experience. An EMI calculator helps prepare financially for your loan journey, whether consolidating debt, expanding a business, or covering personal expenses.